UK economy shrinks by more than expected in April in blow to Rachel Reeves
The UK economy contracted by 0.3% in April, according to the Office for National Statistics (ONS), in a blow for Chancellor Rachel Reeves just a day after she unveiled her spending review.
Figures from the ONS showed the economy went into reverse after growing by 0.2% in March and 0.5% in February.
It was also worse than the 0.1% contraction expected by most economists.
ONS Director of Economic Statistics Liz McKeown said April saw the largest monthly fall on record in goods exports to the United States, with decreases across most types of goods, following the recent introduction of Donald Trump's trade tariffs.
Reeves acknowledged that the latest GDP figures were 'clearly disappointing' but insisted her spending review would help deliver growth.
The chancellor said: 'Our number one mission is delivering growth to put more money in people's pockets through our Plan for Change, and while these numbers are clearly disappointing, I'm determined to deliver on that mission.
'In yesterday's spending review we set out how we'll deliver jobs and growth – whether that's improving city region transport, a record investment in affordable homes or funding Sizewell C nuclear power station. We're investing in Britain's renewal to make working people better off'.
ONS Director of Economic Statistics Liz McKeown said that services and manufacturing both fell, but over the last three months, as a whole, GDP still grew, "with signs that some activity may have been brought forward from April to earlier in the year".
'Both legal and real estate firms fared badly in April, following a sharp increase in house sales in March when buyers rushed to complete purchases ahead of changes to Stamp Duty. Car manufacturing also performed poorly after growing in the first quarter of the year," she said.
'In contrast April was a strong month for construction, research and development and retail, with increases in these only partially offsetting falls elsewhere."
The Conservative shadow chancellor said the fall in GDP in April was the result of 'Rachel Reeves' economic vandalism'.
Sir Mel Stride said: 'Before the election Labour promised 'growth, growth, growth' but today's fall in GDP lays bare the disappointing consequences of Rachel Reeves' economic vandalism.
'Yesterday, the Chancellor should have taken corrective action to fix the problems she has caused. But instead her spending review has all but confirmed what many feared: more taxes are coming.
'Under Labour, we have seen taxes hiked, inflation almost double, unemployment rise, and growth fall. With more taxes coming, things will only get worse and hard-working people will pay the price.'
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